Cannabis Briefs for October 15, 2019October 15, 2019
•MedMen has terminated its agreement to acquire PharmaCann, a $682 million all-stock transaction originally announced last December. MedMen stated that financial headwinds across the industry prompted the company to narrow its focus to its retail brand, its position in the California market, and its digital platform. As part of the termination agreement, PharmaCann will pay a “fee” to MedMen in the form of two retail locations and an operational cultivation and production facility in Illinois as well as a vertically integrated facility in Virginia. MedMen has also fired CFO Michael Kramer and replaced him with chief corporate development officer Zeeshan Hyder.
•Hexo withdrew its previously issued financial outlook for fiscal 2020 and released preliminary revenue figures for the fiscal fourth quarter and year ended July 31. Net revenue for the year was estimated at C$46.5-$48.5 million ($35.1-$36.6m) with fourth quarter revenue making up C$14.5-$16.5 million ($11-$12.5m) of that. “Fourth quarter revenue is below our expectation and guidance, primarily due to lower than expected product sell through,” said Sebastien St-Louis, CEO and co-founder. The company pointed to several problems dogging the industry as explanation: “Slower than expected store rollouts, a delay in government approval for cannabis derivative products and early signs of pricing pressure are being felt nationally,” Hexo wrote. “The delay in retail store openings in our major markets has meant that the access to a majority of the target customers has been limited.”
•Calgary, Alberta-based Sundial Growers recently launched Palmetto, a new recreational brand offering pre-rolls and vape pens. Palmetto is initially launching in Saskatchewan and Manitoba, retailing for approximately $7 a pre-roll or $32 for a pack of five. Sundial is planning other brands named Top Leaf and BC Weed Co. for launches in the near future.
•In case you missed the news last Thursday, Canopy Growth has named Constellation Brands CFO David Klein as its new chairman. The full story can be found here.
•CannTrust released an update on its ongoing efforts to return to regulatory compliance and have its licenses reinstated. The company has been sitting on vast quantities of illicit inventory that were grown outside of its licensure and has also had millions of dollars worth of product returned by provincial authorities. In order to return to compliance, CannTrust will destroy C$12 million ($9.1m) of biological assets and C$65 million ($49.1m) of unauthorized inventory. The destruction process will allow the company to free up much needed capacity both to implement remediation measures and store material that has been grown and processed in accordance with its license.Subscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning. You will also receive the Cannabis edition as part of your subscription.